I am wondering if somebody could shed the light on the procedure of
setting up your own Europe-based online sports-related bookie. I would
like to see a well-structed answer that will include (apart from other
important
issues I might not think of right now) the following:

1. starting capital (a good breakdown structure including all the
needed expenses)
2. amount of staff, necessary skills and the place to find right people 
3. typical problems a new/existing bookmaker faces/is likely to face
and ways to sort them out
4. comments

<Settting up an online bookmakers 

1. Start-up capital.

Capital will be needed to fund:
Research costs ? consulting, legal and accounting fees.
Computer equipment.
Software.
Telecommunications equipment.
Office furniture.
Legal fees.
Leasing premises ? deposit, advance rental payments.
Costs of setting up the company. Company registration etc.
Website development.
Licence fees/permits.
Signage.
Stationery and office sundries.
Hiring staff.

Sufficient working capital to pay running costs including:
Marketing & advertising.
Website hosting.
Office rental and cleaning.
Wages.
Finance costs.
Bank charges.
Insurance.
Utilities.
Unplanned expenses ? allow 10% of capital.

The amount required will depend upon the size of the operation envisaged.
As a guide links to the annual report from Betfair for 2004 and 2005
are given below.

Betfair had 148 staff in 2003 and 287 in 2004 in the following types of jobs:
Management and administration 9, 21
Engineering 35, 77
Operations 94, 164
Marketing 10, 25

In 2003, Revenue was GBP 32,310,000. The company had computer
equipment worth GBP2.5 million and fixtures and fittings worth
604,000.

Source: Betfair Annual Report 2004.
http://www.betfairpromo.com/annualreport2004.pdf

Betfair 2005 annual report.
By 2005, the number of employees had grown to 650.
Website development costs GBP 3,779,000.
http://www.betfaircorporate.com/pdf/ar2005.pdf

Betfair was started in 1999 with GBP 1 million. 
Source: Betfair.
http://www.startups.co.uk/Betfair_com.cLtPlG1oyivadQ.html

iBETX
Turnover ? 25 million a month.
iBetX planning and development started in 2001 . The company had
initially budgeted millions of pounds to see it through the first
three years of business but it is growing at such a rate where they
have already achieved their goals for the next two years.

Source: Startups.co.uk.
http://www.startups.co.uk/iBETX.YW14TsRoyivadQ.html
-----------------------------------------
2. The type of staff needed will be.

Managers and administrative staff to run and control the operations.
Computer engineers to ensure the systems run correctly.
Customer service staff to answer customer queries.
From the 2003 figures from Betfair the ratio of staff was as follows:
1 manager/admin.
4 engineers.
8 operations.
1 marketing.

Systems Engineer
Support maintain and develop the systems.
Provide out of hours support.
Manage the business applications.
Provide EPOS and Non Retail application support.
Build servers/software.
Experience with Unix, Apache, PHP, MySQL, Large OLTP web based systems.
Salary negotiable.
Source: Paddypower
http://www.paddypowerplc.com/vacancies/vacancy49.html

Customer support ? job description and skills needed.
Respond to customer queries by phone, email and letter.
Maintain customer details.
Payment processing.
Statement production.
Ability to work under pressure and on own initiative.
PC skills ? work, excel, email
Excellent telephone manner.
Excellent written communication skills.
Excellent interpersonal and communication skills.
Ability to work in a team.
Salary 20,000 ?25,000 
Shift work.
Source: Paddypower
http://www.paddypowerplc.com/vacancies/vacancy1.html

Betting specialist
Salary 23,000 ? 28,000.
Source: Paddypower
http://www.paddypowerplc.com/vacancies/vacancy2.html


Marketing manager
The ideal candidate will be coming from a sporting, gaming or online
betting background or be very keen to break into the industry. You
must have experience with Search Engine Optimisation (SEO), PPC,
Affiliate relationship management, CPC, email marketing, e-newsletters
and all aspects of Online Marketing. Salary 25,000 to 35,000.
Source: Jobsin.co.uk
http://www.jobsin.co.uk/search.cgi?u=43401


The UK has a large pool of qualified staff as the gambling industry
has been operating there  for 40 years.

Where to advertise vacancies.

Job centres.
Jobcentre Plus is a government run employment service. It is free of
charge. Over 5 million job details are viewed each week by customers.
http://www.jobcentreplus.gov.uk/JCP/Employers/AdvertiseaVacancy/index.html

The internet.
Monster.co.uk
http://www.monster.co.uk/

Jobsite
http://www.jobsite.co.uk/

Directory of online recruitment agencies from Recruit-online.
http://www.recruit-online.co.uk/

Racing publications.
Racing Post
http://www.racingpost.co.uk/news/splash.sd

------------------------------------------------------

3. Problems.

This article looks at the problem facing online betting sites.

Brand awareness is negligible compared with the ?Big Three?
traditional bookmakers (and scope for brand leverage minimal.

Failure by small players to identify a niche within the overall market.

Failure to leverage their operations onto other distribution channels
for example interactive tv.
Little or no scope for differentiation with the UK market.

Traditional bookmakers have reinvented themselves and are now
operating in the P2P space (poker etc).

White label deals only make commercial sense to exchanges that boast
strong liquidity and strong margins.

Betfair?s scale and scope allows it to offer favourable terms to
bookmakers to use its service; to be innovative and to advertise
widely.

The constituency for betting exchanges may not be as broad as had been
first imagined
Intellectual property rights issues now confront exchanges. 
Source: Betting exchanges ? liquidity matters. Bettingmarket.com
http://www.bettingmarket.com/exchangestough.htm

Legal challenge to betting software.
Lawrence Kohls, 61, a Chicago entrepreneur, is claiming he invented
the software mechanisms behind the betting exchanges. In late March he
was awarded a U.S. patent on the "brokerless futures exchange"
process, and he has owned a similar patent in Australia since 2001.
He's trying to raise $15 million to go after Betfair and the other
betting exchanges for royalties, as well as to start up his own
exchange to take sports bets.
Source: Forbes.com
http://www.forbes.com/global/2006/0424/027.html


Ensuring website security is a priority as this report highlights.

Attacks by hackers.
Criminals gangs are understood to be demanding large sums of money
from bookmakers, and warning those that don't pay up that their
Internet sites will be taken offline.
For a company such as Betfair, several hours of downtime would be
extremely expensive -- especially if it coincided with an event such
as the Grand National, which attracts more than £100m in bets.
Britain's National High-Tech Crime Unit (NHTCU) revealed last month
that it is investigating a series of attacks and threats of attacks on
companies in the United Kingdom. It said these had been made by
organised criminals, rather than amateur hackers.
Source: Web bookmakers tool up against blackmail hack attacks.
http://news.zdnet.co.uk/internet/security/0,39020375,39147278,00.htm

Lasseters reports that  the four main external issues that affected
its business in 2004 were the tightening of credit card restrictions
for gambling use by some US based financial institutions; the
introduction of online gambling advertising restrictions in the US;
the uncertainty of a revision to Australian online gambling law; and
rapid appreciation of the Australian dollar discounting the value of
US generated income.
Source: Lasseters? sees online gaming increase. ZDNet Australia.
http://www.zdnet.com.au/news/business/soa/Lasseters_sees_online_gaming_increase/0,39023166,39157361,00.htm



---------------------------------------------
Further sources of information.

In the UK a bookmakers permit is required to allow bets to be taken
over the internet. A bookmakers permit costs GBP 160.00
Source: Department for culture, media and sport.
http://www.culture.gov.uk/gambling_and_racing/fact_sheets/fact_bookmaker.htm

The grant and renewal of bookmakers? permits.
Guidelines for the issuing of permits.
http://66.249.93.104/search?q=cache:pr1rlwzsIR4J:www.culture.gov.uk/NR/rdonlyres/C994E747-70CD-4BF6-BC13-2E739E89631F/0/crimeissuesgrpupdatemarch2604.pdf+bookmakers+permit+london&hl=nl&ct=clnk&cd=2

Global betting and gaming consultants
GBGC was the brainchild of Warwick Bartlett who has more than 40 years
experience in the gambling industry. He is presently chairman of the
Association of British Bookmakers, is a non-executive director of SIS,
and has a seat on the Horse race Betting Levy Board.

GBGC is able to draw on several specialist consultants who can provide
economic research, 'know how' in all areas of gambling, market
research, statistical data, software solutions, payment solutions,
electronic point of sale, information display systems, online
technology and  risk management.
http://www.gbgc.com/index/page.asp?page_no=11>


<Search strategy:>

<bookmakers permit london>
<://www.google.com/search?hl=nl&rls=GGLG%2CGGLG%3A2006-12%2CGGLG%3Aen&q=bookmakers+permit+london&lr=>

<betfair revenue million>
<://www.google.com/search?q=betfair+revenue+million&hl=nl&lr=&rls=GGLG,GGLG:2006-12,GGLG:en&start=10&sa=N>

<"online betting" "business plan"  revenue>
<://www.google.com/search?hl=nl&rls=GGLG%2CGGLG%3A2006-12%2CGGLG%3Aen&q=%22online+betting%22+%22business+plan%22++revenue&lr=>


<Hope this helps.>

---

Request for Answer Clarification by zopahenka-ga on 05 May 2006 12:09 PDT

hi belindalevez-ga,

thanks for the answer, which somehow was accepted without my
knowledge. Well, anyway. However, I am not totally satisfied with the
answer and I'll say why Although I now have some real valuable
information, I still do not have the main thing: understanding how
much it'll cost one person/enterpreneur to set up a bookie from
scratch. I mean even roughly. Betfair's figures is cold comfort if not
grounds for despair. I don't have millions and I don't plan on
launching a market leader, or becoming a rival of a current market
leader.

therefore, based on the structural analysis of the costs involved, can
I have a rough estimate of setting up a small indie bookie? Say, in
terms of UK.

Thanks,

zopahenka-ga

---

Clarification of Answer by belindalevez-ga on 05 May 2006 14:52 PDT

<The most expensive cost is the software. Some companies offer turnkey
betting software. I?ve given links below. Orbis has developed a system
for processing bets. This cost Ladbrokes £ 500,000. Developing your
own software system can cost upwards of $1 million. As an example
Interactive Systems Worldwide spent $1.6 million in two years of
development.

Satellite information services provides raw betting data at a cost of
£5000 for five years.

A secure customer payment system needs to be implemented to receive
money from the customer and pay them out their winnings. A number of
companies offer systems with no set up fees.

One way of getting around the bet processing software costs would be
to set up a telephone betting service. The number of telephone
operators needed would depend on your business level.

The most basic system would be to feed SIS data through to a website
to display prices.
Set up a merchant account to process the money.
Take bets over the phone. 
Settle the bets manually.
A settler can calculate around 1,000 bets a day.
You will need an account with funds with a bookmaker so that you can lay off bets.
Minimum staff:
Manager.
Settler
Customer service operator/s.

Capital costs ? about £105,000
Incorporation £20
UK bookmaker?s permit  £160.00
Computer hardware £2,000
Telecommunications equipment £200
Website £1,000
Office equipment £200
Stationery £20
Working capital (to pay wages etc) £100,000 


SIS Data Services
http://www.sis.tv/data/datsrv.php

SIS charges a licence fee of £5000 for five years.
http://www.pressrooms.net/sis/letter_bookmakeroffer2001.htm

Orbis
http://www.orbisuk.com/home/our_products/sportsbook.htm

Orbis system cost Ladbrokes £ 500,000
http://66.249.93.104/search?q=cache:ic7KB93x9W0J:www.findarticles.com/cf_dls/PI/search.jhtml%3Fisp%3DFA%26cat%3Dcomp%26key%3D%252BGambling%2B%252Bindustry%2B%252BContracts+openbet+competition&hl=nl&ct=clnk&cd=7

Developing own software system costs over $1 million. Interactive
Systems Worldwide spent $1.6 million in two years.
http://www.secinfo.com/dV9u4.7e.htm

Rapid-mobile. 
Turnkey betting software
http://www.rapid-mobile.com/main/en/index.jsp?section=whitelabel

Betgate.
Turnkey sportsbook
http://www.betgate.net/Whatbetgate.asp


STB
http://www.stbgaming.com/stbSite/product/

real-betting software.
http://www.real-betting-software.com/package.html>